IRS Quietly Rolls out FTS Program Nationwide

Part of the problem with the IRS’ terrible reputation is that their scandals and mishaps get publicized in every way imaginable, and often for a few days longer than necessary.  But the good things the IRS is doing tend to go unnoticed.  I guess it’s just not as much fun to read about.

I found an example of this today.  The IRS is expanding a pilot program that it began in select locations in 2006 that allowed small businesses to opt for alternative dispute resolution rather than the standard formal appeals process (and then potential litigation) when disputing an audit.  The program is called Fast Track Settlement (FTS).  It is a smart and attractive option, since the IRS claims that disputes can be resolved in 60 days when they go through FTS, and taxpayers maintain their appeals rights through the process.  The only problem I see is that the mediator in a FTS proceeding is an IRS appeals officer rather than a neutral third party.  Yes, appeals is a separate arm of the IRS, but it’s still the IRS as far as I’m concerned.

I’m not sure why it took seven years for the IRS to make FTS available nationwide, but besides that, it seems like another opportunity lost for those in charge of the IRS’ public perception.  The IRS is at least partly to blame for this phenomenon.  In times like these, the IRS needs to be doing everything it can to leverage their good PR, and that means making sure the public knows about every single time-saving and money-saving measure, otherwise we will only remember the Star Trek parody video and similar headlines.

OIC Pre-Qualifier Tool

The IRS is all about automating everything as much as possible, which isn’t always a good thing.  Just ask the National Taxpayer Advocate, Nina Olsen.  She has always been a big critic of this trend.  One of the problems with taking away the “human element” is that cases tend to get handled incorrectly and unfairly.  After all, cases are made up of actual human beings with unique circumstances, and computer programs don’t always have the sophistication to consider unique circumstances.

A case in point is the IRS’ new “Offer in Compromise Pre-Qualifier Tool.”  What it looks like is an attempt to automate the Offer in Compromise (OIC) process.  All you do is plug in your personal financial information and, BOOM! you’re in.  Ok, that’s not fair.  It doesn’t quite work that way.  In fact, the IRS is careful to say that the tool should only be used as a guide and that their final decision is based on the paperwork that is submitted.  But it’s not too much of a stretch to imagine the IRS enhancing this offer in compromise pre qualifier tool and fully automating the OIC process somewhere down the line.

The pre-qualifier tool takes the taxpayer through 5 main steps, each step containing a series of specific questions:

  1. Basic Information – These are the “deal breakers” that normally result in an OIC being automatically returned (such as missing tax returns or an open bankruptcy)
  2. Assets – Questions about equity in bank accounts, real property, cars, etc.
  3. Income – Monthly income from all sources
  4. Expenses – Actual monthly expenses subject to IRS maximum allowances
  5. Proposal – This is the “MSRP” — the magic number that, if offered to the IRS, may result in an accepted offer

I guess we’ll know how hazardous this tool is when people start ordering an OIC from their tax attorney like they order a sandwich: “One OIC please; I know I qualify because I used the OIC Pre-Qualifier Tool.”

Gibson Case Settled

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Gibson Guitar Corp. settled its criminal case with the Justice Department today, at least that’s when the public announcement was released.  Gibson basically paid to make it all go away.  Federal prosecutors agreed to drop the criminal case on the following conditions:

  1. Gibson pays $300,000 penalty
  2. Gibson donates $50,000 to the National Fish and Wildlife Foundation
  3. Gibson forfeits claim to $262,000 worth of exotic woods seized by the feds

Gibson CEO Henry Juszkiewicz had been publicly denouncing the actions of federal authorities ever since they raided the Tennessee-based facilities last year, reminiscent of taxpayers and taxpayer rights groups who oppose overly-aggressive IRS tax debt collection actions.

Juskiewicz stated that it would have cost the company much more to defend themselves in the litigation than the roughly $600,000 that they paid (and forfeited) in the settlement.